How to avoid unfair dismissal claims as an employer

In this article, we explain what counts as unfair dismissal, where employers often go wrong, and the practical steps you can take to reduce your legal risk.

This article offers general guidance only. For tailored advice on dismissals, contact our employment solicitors today.

What is unfair dismissal

Unfair dismissal occurs when an employee with the right to claim is dismissed without a fair reason or without a fair procedure. In England, employees generally need at least two years of continuous service to qualify, though there are important exceptions for automatically unfair reasons.

What counts as a fair reason

The law recognises five potentially fair reasons for dismissal under the Employment Rights Act 1996:

• Conduct (such as dishonesty, violence, or repeated misconduct).
• Capability (including performance or ill health).
• Redundancy.
• Illegality (for example, where continuing employment would breach immigration rules).
• Some other substantial reason (SOSR), such as a breakdown in trust.

But even with a fair reason, the dismissal must still be handled fairly. That usually includes following the Acas Code of Practice and acting reasonably throughout.

For misconduct or performance-related dismissals, tribunals will  check whether:

• The employer had a genuine belief that the employee was guilty of misconduct.
• That belief was based on a reasonable investigation.
• The decision to dismiss was within the range of reasonable responses.

Common employer mistakes

Many claims don't arise from the reason for dismissal, but from how the decision was made. Common mistakes include:

• Skipping warnings or failing to give the employee a chance to improve.
• Not following a clear disciplinary or capability process.
• Failing to investigate allegations properly.
• Dismissing for misconduct without holding a hearing.
• Confusing redundancy with poor performance or using it as a shortcut.
• Making snap decisions under pressure, without documenting your reasoning.

Where claims do succeed, it's often because the tribunal finds that the employer didn't act reasonably, not because the underlying reason wasn't genuine.

Automatically unfair dismissal

Some dismissals are considered automatically unfair, regardless of how long the employee has worked for you. These include cases where the dismissal was connected to:

• Whistleblowing.
• Health and safety concerns.
• Pregnancy or maternity leave.
• Trade union membership or activity.
• Asserting statutory rights (e.g. national minimum wage).

In these cases, the employee does not need two years of service to bring a claim.

What about constructive dismissal

Constructive dismissal happens when an employee resigns in response to a serious (or fundamental) breach of contract by the employer, such as a demotion, pay cut, or failure to deal with bullying.  

If the tribunal agrees that the employee was entitled to resign in the circumstances,  the employee is likely to succeed with a constructive unfair dismissal claim.  Employers sometimes fall into this trap by failing to deal properly with grievances or by making sudden changes without consultation.

What about wrongful dismissal

Wrongful dismissal is different from unfair dismissal. It relates to a breach of contract, usually when an employee is dismissed without being given proper notice or pay in lieu of notice (PILON).

Unlike unfair dismissal, there's no minimum length of service needed to bring a wrongful dismissal claim. These claims often arise when employers act hastily or misunderstand notice entitlements.

Having clear notice periods and PILON clauses in your employment contracts can help reduce the risk of these claims.

How to reduce the risk of claims

There's no guaranteed way to avoid all claims, but taking these steps will make it easier to defend your decisions if they are challenged:

• Follow your own disciplinary or capability procedures.
• Comply with the Acas Code of Practice.
• Keep clear written records of conversations, warnings, and investigations.
• Avoid knee-jerk reactions — take time to reflect and seek advice where needed.
• Usually offer the right of appeal.

If you fail to follow the Acas Code, a tribunal can increase any compensation award by up to 25%.

Where dismissal is being considered, it's worth reviewing the entire process with a legal adviser, particularly if there are complicating factors such as long service, protected characteristics (e.g. race, sex, disability), or potential whistleblowing concerns.

Contact our employment law solicitors

A fair dismissal is about more than just having a valid reason — it's about showing that you followed the right steps. Even well-intentioned decisions can go wrong if the process isn't legally compliant.

Our employment solicitors help employers plan and manage dismissals with confidence, ensuring that your documentation, reasoning and procedures stand up to scrutiny. Whether you're dealing with a performance or conduct issue, redundancy or a breakdown in trust, we can support you throughout the process.